FILED

February 14, 2018

released at 3:00 p.m.

EDYTHE NASH GAISER, CLERK

SUPREME COURT OF APPEALS

OF WEST VIRGINIA

STATE OF WEST VIRGINIA

SUPREME COURT OF APPEALS

CHEVRON U.S.A., INC.,

Defendant Below, Petitioner,

vs.) No. 16-1213 (Marshall County Civil Action No. 16-C-153)

JOHN ROBERT BONAR AND JOHN & WERNER LAW OFFICES, PLLC,

Plaintiffs Below, Respondents.

MEMORANDUM DECISION

Petitioner, defendant below, Chevron U.S.A., Inc. (“Chevron”), by counsel J.

Nicholas Ranjan, appeals a circuit court order denying Chevron’s motion to compel

arbitration, arguing that the circuit court erred in finding Chevron had waived its right to

enforce the subject arbitration agreement. Respondents, John Robert Bonar and John &

Werner Law Offices, PLLC (“Lessors”), by counsel Anthony I. Werner and Joseph J. John,

filed a timely response.

This Court has considered the parties’ briefs, the appendix record designated for our

review, the pertinent authorities, and oral argument. Upon our scrutiny thereof under the

appropriate standard of review, the Court finds that the Circuit Court of Marshall County

erred, as a matter of law, by concluding that Chevron, by virtue of its pre-litigation conduct,

waived its contractual right to compel arbitration. This case satisfies the “limited

circumstances” requirement of Rule 21(d) of the Rules of Appellate Procedure and is

appropriate for a memorandum decision rather than an opinion.

Chevron and Lessors are current parties to an oil and gas lease (“the Lease”) that was

originally executed in August 2010. The original lease was executed between Grace Bonar

and her son, John Robert Bonar, as lessors, and TriEnergy Holdings, LLC (“TriEnergy”), as

lessee. Grace Bonar ultimately transferred her rights under the lease to John Robert Bonar. 

John & Werner Law Offices, PLLC, acquired some of the royalty rights under the lease from

John Robert Bonar. Chevron became the successor-in-interest to all of TriEnergy’s rights

and obligations under the Lease.

In March 2016, Chevron began deducting certain costs from the royalty payments it

made to Lessors. According to Lessors, neither Chevron nor its predecessors had deducted

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costs from their royalty payments prior to March 2016. Lessors contend that the deduction

of costs is expressly prohibited by the terms of the Lease. Chevron disagrees.

Pertinent to the instant appeal, the Lease contains the following arbitration clause:

(17) ARBITRATION – Any question concerning this lease or performance

thereunder shall be ascertained and determined by three disinterested

arbitrators, one thereof to be appointed by the Lessor, one by the Lessee[,] and

the third by the two so appointed as aforesaid, and the award of such three

persons shall be final and conclusive. The cost of such arbitration will be

borne equally by the parties.

Notwithstanding the arbitration clause, in August 2016, Lessors filed a declaratory

judgment action in the Circuit Court of Marshall County seeking a judicial determination that

Chevron had no right to deduct costs from Lessors’ royalty payments, and additionally

seeking reimbursement with interest of costs that previously had been deducted by Chevron. 

Chevron responded to the action with a motion to compel arbitration, in which Chevron also

sought dismissal of the case. Lessors filed a memorandum in opposition to Chevron’s

motion, wherein they argued that the arbitration clause was unconscionable and, therefore,

unenforceable.1

At a hearing before the circuit court, Lessors presented the argument that Chevron had

waived its right to compel arbitration through its pre-litigation conduct, i.e., by unilaterally

deciding the “question” of whether certain costs could be deducted from royalties without

submitting the question to arbitration pursuant to the broadly-worded arbitration clause. The

circuit court agreed and, by order entered December 11, 2016, denied Chevron’s motion to

compel arbitration. In doing so, the circuit court expressly found that Chevron, “by its prelitigation conduct in unilaterally commencing certain cost deductions from [Lessors’]

royalties without first seeking through arbitration the authority to do so[,] has waived any

contractual right to compel [Lessors] into arbitration of the question of costs.” It is from this

adverse ruling that Chevron appeals.

It has been established that “[a]n order denying a motion to compel arbitration is an

interlocutory ruling [that] is subject to immediate appeal under the collateral order doctrine.” 

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Lessors’ assertion of unconscionability was “based on the fact that the costs

of the arbitration can be expected to reach or exceed $40,000.00[,] whereas the amount in

controversy, the official value of the stakes in the disputes [as] specified in the Complaint[,]

[is] $2,266.00.” Chevron asserted that the amount in dispute was significantly higher insofar

as Lessors also sought a declaration that future deductions could not be made.

2
Syl. pt. 1, Credit Acceptance Corp. v. Front, 231 W. Va. 518, 745 S.E.2d 556 (2013). 

Moreover, our review of this matter is de novo. See Syl. pt. 1, West Virginia CVS Pharmacy,

LLC v. McDowell Pharmacy, Inc., 238 W. Va. 465, 796 S.E.2d 574 (2017) (“When an appeal

from an order denying a motion to dismiss and to compel arbitration is properly before this

Court, our review is de novo.”); Finch v. Inspectech, LLC, 229 W. Va. 147, 153, 727 S.E.2d

823, 829 (2012) (“‘[W]e apply a de novo standard of review to [a] circuit court’s

interpretation of [a] contract.’” (quoting Zimmerer v. Romano, 223 W. Va. 769, 777, 679

S.E.2d 601, 609 (2009) (per curiam))).

Chevron contends that the circuit court erred, and assigned too broad a meaning to the

term “question” as used in the arbitration clause, when it ruled that Chevron’s pre-litigation

conduct of deducting certain costs from royalty payments made to Lessors without first

seeking authority to do so through arbitration was sufficient to waive its contractual right to

compel arbitration.2

 Lessors argue in support of the circuit court’s ruling.

With respect to waiver of the right to compel arbitration, this Court has held that

[t]he right to arbitration, like any other contract right, can be waived. 

To establish waiver of a contractual right to arbitrate, the party asserting

waiver must show that the waiving party knew of the right to arbitrate and

either expressly waived the right, or, based on the totality of the circumstances,

acted inconsistently with the right to arbitrate through acts or language. There

is no requirement that the party asserting waiver show prejudice or detrimental

reliance.

Syl. pt. 6, Parsons v. Halliburton Energy Servs., Inc., 237 W. Va. 138, 785 S.E.2d 844

(2016). This case turns on whether Chevron acted inconsistently with its right to arbitrate. 

The answer to this query requires consideration of the language utilized in the subject

arbitration clause requiring that “[a]ny question concerning this lease or performance

thereunder shall be ascertained and determined by three disinterested arbitrators[.]” 

(Emphasis added).

2

Chevron additionally argues that waiver is a procedural matter for the

arbitrator, not the court; therefore, the circuit court erred by ruling on the issue. We disagree. 

This Court has expressly held that “[i]n the absence of an agreement to the contrary, waiver

of a contractual right to arbitration is a threshold question of enforceability to be determined

by a court, not an arbitrator.” Syl. pt. 4, Williams v. Tucker, 239 W. Va. 395, 801 S.E.2d 273

(2017). Chevron has failed to direct this Court to a delegation clause or other clause in the

Lease assigning the waiver issue to arbitration.

3
In considering the foregoing contractual provision, we are mindful that “[n]othing in

the Federal Arbitration Act, 9 U.S.C. § 2, overrides normal rules of contract interpretation. 

Generally applicable contract defenses—such as laches, estoppel, waiver, fraud, duress, or

unconscionability—may be applied to invalidate an arbitration agreement.” Syl. pt. 9, Brown

v. Genesis Healthcare Corp., 228 W. Va. 646, 724 S.E.2d 250 (2011), reversed on other

grounds by Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 132 S. Ct. 1201, 182

L. Ed. 2d 42 (2012) (hereinafter “Brown I”). We also recognize that 

“‘[a] valid written instrument which expresses the intent of the parties

in plain and unambiguous language is not subject to judicial construction or

interpretation but will be applied and enforced according to such intent.’ [Syl.

pt. 1,] Cotiga Development Co. v. United Fuel Gas Co., 147 W. Va. 484, 128

S.E.2d 626 (1962).” Syl. pt. 1, Bennett v. Dove, 166 W. Va. 772, 277 S.E.2d

617 (1981).

Dan’s Carworld, LLC v. Serian, 223 W. Va. 478, 482-83, 677 S.E.2d 914, 918-19 (2009). 

Moreover, 

“[i]f the contract language is found to be unambiguous[,] then ‘[i]t is the safest

and best mode of construction to give words, free from ambiguity, their plain

and ordinary meaning’” Supervalu Operations, Inc. v. Center Design, Inc., 206

W. Va. 311, 315, 524 S.E.2d 666, 670 (1999) (per curiam) (quoting Syl. pt. 3,

Bennett v. Dove, 166 W. Va. 772, 277 S.E.2d 617).

Dan’s Carworld at 483, 677 S.E.2d at 919. We find no ambiguity in the relevant portion of

the arbitration agreement. Although the parties disagree as to the proper meaning to be

afforded the phrase “any question,” it has long been recognized that “a contract is not

rendered ambiguous merely because the parties disagree as to its construction.” Perrine v.

E.I. du Pont de Nemours & Co., 225 W. Va. 482, 508, 694 S.E.2d 815, 841 (2010). See also

Syl. pt. 3, in part, Energy Dev. Corp. v. Moss, 214 W. Va. 577, 591 S.E.2d 135 (2003) (“The

mere fact that parties do not agree to the construction of a contract does not render it

ambiguous.”); Syl. pt. 1, in part, Berkeley Cty. Pub. Serv. Dist. v. Vitro Corp. of Am., 152

W. Va. 252, 162 S.E.2d 189 (1968) (same). 

Lessors contend that the circuit court correctly read the phrase “any question” broadly

to essentially mean any inquiry. Chevron, on the other hand, contends that the phrase should

be afforded a narrow meaning akin to a conflict. We find it important to our resolution of

this matter to note that, in ascertaining the meaning of this term as intended by the parties to

the contract, we are obliged to consider the context in which it is used, i.e., an arbitration

agreement. See Benson v. AJR, Inc., 215 W. Va. 324, 327, 599 S.E.2d 747, 750 (2004) (per

curiam) (recognizing that “any term that has significance in a given contract[] must be

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defined based on the subject matter of the contract and the intent of the document’s

drafters”). Considering the plain and ordinary meaning of the term “question” in the context

of arbitration, which is a form of dispute resolution, we observe that its definition includes

the concept of a dispute. See Webster’s New World College Dictionary 1192 (5th ed. 2016)

(providing definition of “question,” that includes “something in controversy before a court”

and “to dispute; challenge”); New Oxford American Dictionary 1431 (3d ed. 2010) (defining

the term “question,” in part, as “the raising of a doubt about or objection to something,” and

“a matter forming the basis of a problem requiring resolution”); Webster’s Third New

International Dictionary Unabridged 1863 (1970) (including within definition of “question”

the terms “objection” and “dispute”). Thus, considering the phrase “any question” in the

proper context of arbitration, it becomes clear that the phrase is intended to refer to an

objection or dispute, and not a mere inquiry. Otherwise, nearly any action taken by a party

to perform under the Lease would first require arbitration, regardless of whether there was

a dispute among the parties. Such a result simply is unreasonable. “Generally, this Court

will not interpret a contract in a manner that creates an absurd result.” Dunbar Fraternal

Order of Police, Lodge No. 119 v. City of Dunbar, 218 W. Va. 239, 244, 624 S.E.2d 586, 591

(2005) (per curiam). See also Glen Falls Ins. Co. v. Smith, 217 W. Va. 213, 221, 617 S.E.2d

760, 768 (2005) (recognizing that “[a] contract of insurance should never be interpreted to

create an absurd result, but should instead receive a reasonable interpretation”).

Accordingly, for the reasons explained above, we conclude that the circuit court erred

in ruling that Chevron’s conduct was sufficient to waive its right to compel arbitration. 

Instead, we find that, pursuant to the plain language of the arbitration agreement contained

in the Lease, Chevron was under no obligation to seek arbitration before deducting certain

costs from royalty payments. Thus, in so doing, Chevron did not act inconsistently with its

right to now seek to arbitrate the resulting dispute over whether such deductions are

authorized under the terms of the Lease.

Both parties additionally seek this Court’s resolution of a second question, i.e.,

whether the arbitration agreement is unconscionable.3

 Lessors argue that the arbitration

3

This issue, though raised below, was not expressly addressed by the circuit

court. However, this Court previously has exercised its discretion to consider issues that are

not technically proper before us when neither party objects, and the issue has been briefed

by both parties. See, e.g., Texas E. Transmission, LP v. West Virginia Dep’t of Envtl. Prot.,

Div. of Mining & Reclamation, ___ W. Va. ___, ___ n.18, 807 S.E.2d 802, 810 n.18 (2017)

(“Neither the order of the SMB nor the circuit court’s order discusses W. Va. CSR

§ 38-2-3.32.a. However, insofar as the Rule has been briefed by both parties, and Marshall

Coal has not objected to this issue, we will assume the Rule was raised below and will

(continued...)

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provision is both procedurally and substantively unconscionable; Chevron contends that it

is neither. 

A contract term is unenforceable if it is both procedurally and

substantively unconscionable. However, both need not be present to the same

degree. Courts should apply a “sliding scale” in making this determination: 

the more substantively oppressive the contract term, the less evidence of

procedural unconscionability is required to come to the conclusion that the

clause is unenforceable, and vice versa.

Syl. pt. 9, Brown v. Genesis Healthcare Corp., 229 W. Va. 382, 729 S.E.2d 217 (2012)

(quotations and citation omitted) (hereinafter “Brown II”). Lessors argue that the arbitration

agreement is substantively unconscionable due to its requirement of three arbitrators, which

Lessors speculate would result in the cost of arbitration being $40,000.00 or more to resolve

a dispute where the amount in controversy is only $2,266.00.4

 Lessors complain that

“nothing in the provision prohibits Chevron from choosing [an arbitrator] from literally

anywhere in the country, at whatever hourly rate that arbitrator may attempt to impose,

perhaps with a hefty retainer.” Chevron asserts that Lessors have failed to meet their burden

of proving prohibitive arbitration costs or that the arbitration agreement is one-sided. 

This Court has held that

[s]ubstantive unconscionability involves unfairness in the contract itself

and whether a contract term is one-sided and will have an overly harsh effect

on the disadvantaged party. The factors to be weighed in assessing substantive

3

(...continued)

exercise our discretion to consider the same.”); Falls v. Union Drilling Inc., 223 W. Va. 68,

71 n.8, 672 S.E.2d 204, 207 n.8 (2008) (per curiam) (“Although this interlocutory matter is

not, as a matter of procedure, technically proper before us as an appeal, because Appellees

have not raised this issue, and have addressed the issues presented herein on their merits, we

will, in our discretion, address this matter as an appeal that is properly before us.”); Syl. pt.

3, State v. Salmons, 203 W. Va. 561, 509 S.E.2d 842 (1998) (“When a defendant assigns an

error in a criminal case for the first time on direct appeal, the state does not object to the

assignment of error and actually briefs the matter, and the record is adequately developed on

the issue, this Court may, in its discretion, review the merits of the assignment of error.”).

4

Chevron contends that amount in dispute is significantly higher insofar as

Lessors also seek a declaration that future deductions of costs from royalty payments may

not be taken by Chevron.

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unconscionability vary with the content of the agreement. Generally, courts

should consider the commercial reasonableness of the contract terms, the

purpose and effect of the terms, the allocation of the risks between the parties,

and public policy concerns.

Syl. pt. 12, Brown II, 229 W. Va. 382, 729 S.E.2d 217 (quotations and citation omitted). 

Lessors’ complaint of oppressively high costs is merely speculative.5

 See also Nationstar

Mortg., LLC v. West, 237 W. Va. 84, 93, 785 S.E.2d 634, 643 (2016) (rejecting speculative

estimation of costs of arbitration as evidence of substantive unconscionability). Moreover,

Lessors point to nothing in the arbitration agreement that is one-sided. In fact, the arbitration

agreement expressly specifies that “[t]he cost of such arbitration will be borne equally by the

parties.” (Emphasis added). We find no persuasive evidence of substantive

unconscionability. 

Lessors additionally argue that the arbitration agreement is procedurally

unconscionable. They base their argument on the fact that neither Grace Bonar nor John

Robert Bonar, who originally executed the Lease agreement with TriEnergy, are

sophisticated or experienced in negotiating contracts, though they concede that they

successfully negotiated the inclusion in the Lease of the term prohibiting the deduction of

certain costs. Moreover, they complain that TriEnergy made no effort to explain to them the

nature of arbitration. Chevron argues that the Lessors have failed to establish procedural

unconscionability. We agree.

Procedural unconscionability is concerned with inequities,

improprieties, or unfairness in the bargaining process and formation of the

contract. Procedural unconscionability involves a variety of inadequacies that

results in the lack of a real and voluntary meeting of the minds of the parties,

considering all the circumstances surrounding the transaction. These

inadequacies include, but are not limited to, the age, literacy, or lack of

sophistication of a party; hidden or unduly complex contract terms; the

adhesive nature of the contract; and the manner and setting in which the

contract was formed, including whether each party had a reasonable

opportunity to understand the terms of the contract.

5

Lessors’ estimation of the cost of arbitration is based upon the affidavit of a

local lawyer regarding the cost of arbitrating a completely unrelated dispute involving an oil

and gas lease. There is no indication in the affidavit that the disputed issues or the parties’

financial obligations under the terms of the lease agreement bear any similarity to the case

sub judice. We find this affidavit insufficient evidence of what the costs might be to arbitrate

the instant matter.

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Syl. pt. 17, Brown I, 228 W. Va. 646, 724 S.E.2d 250. In this case, Lessors have failed to

establish procedural unconscionability. The arbitration agreement at issue is simple and

straightforward, and Lessors have provided insufficient evidence of “inequities,

improprieties, or unfairness in the bargaining process and formation of the contract.” Id.

The doctrine of unconscionability means that, because of an overall and

gross imbalance, one-sidedness or lop-sidedness in a contract, a court may be

justified in refusing to enforce the contract as written. The concept of

unconscionability must be applied in a flexible manner, taking into

consideration all of the facts and circumstances of a particular case.

Syl. pt. 4, Brown II, 229 W. Va. 382, 729 S.E.2d 217. Lessors have failed to establish the

arbitration agreement in the Lease is unconscionable.

For the reasons set out herein, the December 11, 2016, order of the Circuit Court of

Marshall County is reversed, and this case is remanded for entry of an order compelling

arbitration.

Reversed and Remanded.

ISSUED: February 14, 2018

CONCURRED IN BY:

Chief Justice Allen H. Loughry II

Justice Robin Jean Davis

Justice Margaret L. Workman

Justice Elizabeth D. Walker

DISQUALIFIED:

Justice Menis E. Ketchum

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